Lafayette Bone & Joint Clinic (Charles Morris) v. Louisiana United Business Sif

Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #036

FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 29th day of June, 2016, are as follows:

BY HUGHES, J.:

2015-C -2137 LAFAYETTE BONE & JOINT CLINIC (CHARLES MORRIS), ET AL. v.
C/W LOUISIANA UNITED BUSINESS SIF, ET AL.
2015-C -2138
As set forth herein above, we reverse, in part, the appellate
court’s modification of the amount awarded by the OWC and affirm,
in part, the decision of the appellate court to award penalties
and attorney fees.
REVERSED IN PART; AFFIRMED IN PART.

KNOLL, J., concurs and assigns reasons.
WEIMER, J., dissents and assigns reasons.
GUIDRY, J., concurs and assigns reasons.

Page 1 of 1
06/29/2016

SUPREME COURT OF LOUISIANA

No. 2015-C-2137

LAFAYETTE BONE & JOINT CLINIC (CHARLES MORRIS), ET AL.
VERSUS LOUISIANA UNITED BUSINESS SIF, ET AL.

CONSOLIDATED WITH

No. 2015-C-2138

LAFAYETTE BONE & JOINT CLINIC (CHARLES POOLE, JR.), ET AL.
VERSUS GUY HOPKINS CONSTRUCTION CO., INC., ET AL.

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, THIRD
CIRCUIT, OFFICE OF WORKERS’ COMPENSATION, DISTRICT 4

HUGHES, J.

We granted writs in these cases to review the appellate court decisions,

which awarded unreimbursed prescription medication costs beyond the $750

limitation set forth in LSA-R.S. 23:1142(B) and awarded penalties and attorney

fees, on appeal of the Louisiana Office of Workers’ Compensation (“OWC”)

decision, which denied penalties and attorney fees and limited the reimbursements

for prescription medications to the $750 statutory limit. For the reasons that

follow, we reverse the appellate court in part and affirm in part.

FACTS AND PROCEDURAL HISTORY

Both of the injured employees in these cases, Charles Morris and Charles

Poole, were treated at the Lafayette Bone & Joint Clinic (“LB&J”); Mr. Morris

was treated by Dr. Louis Blanda and Mr. Poole by Dr. John Cobb. During the
course of treatment by these doctors, both Mr. Morris and Mr. Poole were

prescribed medications, which were dispensed at LB&J by LB&J employees.

On June 5, 2008, the workers’ compensation payor, Louisiana United

Business SIF (“LUBA”), sent letters to LB&J and its doctors stating that LUBA

would no longer pay for prescription medications directly dispensed by LB&J and

directing LB&J doctors to issue future prescriptions for the instant injured

employees that could be filled at local retail pharmacies.1 LUBA-insured injured

employees had previously been issued prescription medication cards, which

allowed them to fill their prescriptions at local retail pharmacies without any out-

of-pocket expense. 2 Despite these notices and subsequent denials of requests for

reimbursement of dispensed prescription medications, LB&J doctors continued to

dispense prescription medications to these injured employee patients throughout

2008 (on seven occasions to Mr. Morris and on five occasions to Mr. Poole) and to

submit requests for reimbursement to LUBA. LUBA declined payment for these

requests, citing its prior June 5, 2008 notice.

LB&J and the treating physicians thereafter filed disputed claim forms with

the OWC, seeking to recover the cost of the medications dispensed, along with

penalties and attorney fees. Following a joint trial in these two cases, the OWC

judge ruled that the plaintiff/health care providers’ recovery for medications

1
In addition to the June 5, 2008 letters, LUBA had in the two previous years (2006 and 2007)
directed letters to Dr. Blanda, Dr. Cobb, and LB&J, informing them that the workers’
compensation claimants enrolled with LUBA had been provided a prescription card, allowing
them to fill their prescriptions with the card at local retail pharmacies at a lower cost, and
requesting that LUBA claimants be allowed to use the prescription card program when filling
prescriptions issued by LB&J doctors.
2
The letter accompanying the prescription cards sent to LUBA-insured injured employees
informed the injured employees that the prescription card was provided “for those drugs
prescribed by your workers’ compensation authorized physicians” and that when the card was
used at a participating pharmacy the injured employee would “have no out-of-pocket expenses
or any claims forms to complete.” Forty-eight retail pharmacies were specifically named in the
letter as participating pharmacies (including Albertsons, CVS, Fred’s, Health Mart, Kmart, Rite
Aid, Sam’s Club, Schwegmann, Target, Walgreens, Walmart, and Winn-Dixie). Two toll free
phone numbers and an Internet website address were also provided for injured employees to
obtain the names of other participating pharmacies, as the letter stated, “We have many local
independent pharmacies, too numerous to list here.”

2
dispensed after June 5, 2008 was limited by LSA-R.S. 23:1142(B)3 to $750 for

each injured employee, since the medications were dispensed as nonemergency

treatment by the plaintiff/health care providers without the consent of the payor.

Further, the OWC judge found that no penalties or attorney fees were warranted

because LUBA had clearly advised the plaintiff/health care providers that no

further reimbursement would be made for prescription medications dispensed by

LB&J doctors after June 5, 2008.

The plaintiff/health care providers appealed, seeking an increase in the

amount awarded and an award of penalties and attorney fees. Concluding that the

OWC decision was manifestly erroneous, in finding that the prescription

medications dispensed after June 5, 2008 in connection with authorized LB&J

office visits were not also authorized and in finding that there was a valid reason

for LUBA to have denied reimbursement for the medications at issue, the appellate

court affirmed in part and reversed in part, increasing the amounts awarded from

$750 to the full amounts charged for the medications by the plaintiff/health care

providers and awarding penalties and attorney fees pursuant to LSA-R.S.

23:1201(F)(4). 4

Thereafter, this court granted the defendants’ applications for certiorari. See

Lafayette Bone & Joint Clinic v. Louisiana United Business SIF, 15-2137 (La.

3
Section 1142(B) provides, in pertinent part:

Nonemergency care. (1)(a) Except as provided herein, each health care provider
may not incur more than a total of seven hundred fifty dollars in nonemergency
diagnostic testing or treatment without the mutual consent of the payor and the
employee as provided by regulation. Except as provided herein, that portion of
the fees for nonemergency services of each health care provider in excess of
seven hundred fifty dollars shall not be an enforceable obligation against the
employee or the employer or the employer’s workers’ compensation insurer
unless the employee and the payor have agreed upon the diagnostic testing or
treatment by the health care provider.
* * *
4
LB&J and Dr. Blanda were awarded $2,000 in penalties and a total of $4,125 in attorney fees in
the Charles Morris case, and LB&J and Dr. Cobb were awarded $2,000 in penalties and a total of
$3,750 in attorney fees in the Charles Poole case.

3
2/5/16), 186 So.3d 1170; Lafayette Bone & Joint Clinic v. Guy Hopkins

Construction Co., 15-2138 (La. 2/5/16), 186 So.3d 1171. The defendants have

presented the following assignments of error to this court: (1) the appellate court

erred in holding that a choice-of-pharmacy issue could not be raised in this health

care provider-filed action; (2) the appellate court erred in holding that LUBA could

not limit their authorization, granted to a health care provider for certain

medication treatment, to specifically withhold its consent for the dispensing of

pharmaceutical medications; and (3) the appellate court erred in awarding penalties

and attorney’s fees to the plaintiffs.

LAW AND ANALYSIS

The resolution of the issues presented in these cases turns on the proper

application of LSA-R.S. 23:1142(B), which directs that, unless otherwise provided,

a health care provider cannot incur more than a total of $750 in nonemergency

diagnostic testing or treatment without the mutual consent of the workers’

compensation payor and the employee, and any portion of nonemergency service

fees in excess of $750 is expressly declared to be an unenforceable obligation

against the employee or the employer or the employer’s workers’ compensation

insurer, unless the payor and the employee have agreed on the diagnostic testing or

treatment by the health care provider.

Choice of Pharmacy

We first address the assignment of error asserting that the appellate court

erred in ruling that a choice-of-pharmacy issue could not be raised in this health

care provider-filed action, and we find no error in the appellate court’s refusal to

consider the choice-of-pharmacy issue, albeit for a different reason.

Citing Downs v. Chateau Living Center, 14-0672, pp. 9-10 (La. App. 5

Cir. 1/28/15), 167 So.3d 875, 881; Bordelon v. Lafayette Consolidated

Government, 14-0304, p. 3 (La. App. 3 Cir. 10/1/14), 149 So.3d 421, 423, writ

4
denied, 14-2296 (La. 2/6/15), 158 So.3d 816, and Sigler v. Rand, 04-1138, p. 15

(La. App. 3 Cir. 12/29/04), 896 So.2d 189, 198, writ denied, 05-0278 (La. 4/1/05),

897 So.2d 611, LUBA asserts that the workers’ compensation employer/payor is

entitled to choose the pharmacy where the injured employee may fill his covered

prescriptions. Asserting the contrary, the plaintiff/health care providers cite

Burgess v. Sewerage & Water Board of New Orleans, 15-0918, pp. 14-15 (La.

App. 4 Cir. 2/3/16), 187 So.3d 49, 57-58, which held: “[W]e disagree with the

holding in Bordelon that the choice of pharmacy belongs to the employer . . . .

[W]e find the choice of pharmacy belongs to the employee . . . .”

Unlike LSA-R.S. 23:1121(B)(1) (“The employee shall have the right to

select one treating physician in any field or specialty.”), there is no explicit

workers’ compensation law directing that one party has the exclusive right to

choose a prescription medication provider. Paragraph (A) of LSA-R.S. 23:1203

directs only that the “employer shall furnish all necessary drugs” for the treatment

of an injured employee work-related injury.

Moreover, the evidence presented in these cases does not raise a tenable

employee choice issue, as there was no testimony presented from the injured

employees (Charles Morris and Charles Poole), the treating physicians (Dr. Blanda

and Dr. Cobb), or the nursing staff of the treating physicians. The only witnesses

whose testimony was presented to the OWC were: LB&J administrative/clerical

employees Simone Clark5 and Sandy Guidry, 6 who were involved in the

5
Ms. Clark testified about the billing practices at LB&J and account balances of the injured
employees at issue in this case. Ms. Clark further testified that each LB&J doctor had his own
separate, locked pharmacy cabinet, from which prescription medications were dispensed. She
also indicated that she was under the impression that a nurse would have asked patients whether
they wanted their prescriptions filled at LB&J or elsewhere.
6
Ms. Guidry testified that she dispensed medications only for Dr. Hodges, but that she
supervised the dispensing of medications by employees for the other LB&J doctors; she also
stated that she was responsible for filing claims for reimbursement for the medications dispensed
from the doctors’ in-house pharmacies. Ms. Guidry testified that when Dr. Hodges’ nurse
electronically directed a prescription to print out in her office, she would attach a label to the
appropriate prepackaged medication (it was not necessary to count out pills and place them in a
5
dispensing of prescription medications and the filing of claims for reimbursement

for the medications dispensed to the injured employees; LB&J physician Dr.

Daniel Hodges,7 who was not the treating physician for the patients at issue, but

who had treated other injured employee patients and who testified generally about

LB&J’s practice of dispensing prescription drugs; and LUBA Care Supervisor

Clyde Paul Roy, Jr., who testified as to the economic considerations surrounding

LUBA’s decision not to reimburse for physician-dispensed prescription

medications, discussed hereinafter.

Our review of the testimony offered into evidence before the OWC reveals

that the plaintiff/health care providers did not establish that the injured employees

in these cases made an affirmative choice of LB&J as their prescription medication

provider. 8 LB&J witnesses testified only as to the general operating procedures

relative to dispensing prescriptions for workers’ compensation patients at LB&J in

2008. Because the persons who would have been involved in a discussion about

the injured employee patients’ choice of pharmacy (the patients, the treating

bottle, as the pills were already sealed in packages of individual prescription quantities, so only a
label, bearing the patient’s name and dosing instructions, needed to be affixed to the sealed
package); the labeled, sealed package was then given to the patient. Ms. Guidry further testified
that her first contact with patients during the pertinent time period was when she gave them the
medications; she did not ask patients whether they wanted to have their prescriptions filled at
LB&J, as she was under the impression that either the treating physician or the nurse had done
so.
7
Dr. Hodges testified that, prior to the opening of a traditional pharmacy (the Falcon Pharmacy)
at LB&J in 2009, each LB&J doctor kept a stock of prepackaged medications, which LB&J
doctors would prescribe and LB&J employees would dispense to workers’ compensation patients
as needed. Dr. Hodges was not familiar with the specific procedures relative to the dispensing
of, or billing for, prescription medications; he stated that he would order a prescription
medication for a patient and give it to his nurse, who would handle the prescription from there.
Dr. Hodges indicated that he did not ask his workers’ compensation patients whether they
wanted their prescriptions filled at LB&J, and he was not sure who would have talked to the
patient about where the patient wanted the prescription filled; he stated, “I’m sure at some point
they were probably asked.”
8
Cf. Smith v. Southern Holding, Inc., 02-1071, pp. 8-9 (La. 1/28/03), 839 So.2d 5, 10, wherein
this court, with reference to LSA-R.S. 23:1121’s grant to the injured employee of the right to
“select” a physician, indicated that the common usage of the word “select” is synonymous with
“choose” and that these words mean, respectively, “to choose in preference to another or others;
pick out” and “to select from or in preference to another or other things or persons”; this court
rejected the employer’s contention that because the injured employee had submitted to treatment
by the employer’s physician, he had made a de facto choice of a physician.

6
physicians, and/or the physicians’ nurses) did not testify in these cases, there is an

insufficient factual basis upon which to adjudicate the validity of a such a choice

vis-à-vis LUBA’s assertion of the right of choice as the workers’ compensation

payor.

Nor would resolution of the choice-of-pharmacy issue be dispositive of the

matters before the court. As we have stated, these cases hinge on LSA-R.S.

23:1142(B)’s admonition that a “health care provider may not incur more than a

total of seven hundred fifty dollars in nonemergency diagnostic testing or treatment

without the mutual consent of the payor and the employee.” (Emphasis added.) In

these cases, we conclude hereinafter that the plaintiff/health care providers did not

have the consent of the payor, LUBA, even if they had obtained the consent of the

injured employees, to dispense prescription medications after June 5, 2008.

Therefore, we find no error in the appellate court’s refusal to consider the choice-

of-pharmacy issue.

Mutual Consent

We next address LUBA’s contention that the appellate court erred in holding

that LUBA’s authorization in these cases (for the two injured employees to obtain

medical treatment from LB&J physicians 9) also encompassed the dispensing of

prescription medications to the injured employee patients during office visits

occurring after LUBA’s June 5, 2008 letter (advising that no further LB&J-

dispensed prescription medications would be covered).

The June 5, 2008 letters to LB&J and it physicians stated that LUBA “will

no longer reimburse for physician dispensed medications” and advised LB&J

physicians to “direct our claimants to the nearest retail pharmacy.” We find that the

effect of this letter was clearly a withdrawal and/or revocation by LUBA of its

9
The parties do not dispute that LUBA had authorized medical treatment by LB&J physicians or
that the pharmaceutical treatment prescribed by LB&J physicians was necessary for the injured
employee patients’ work-related injuries.

7
prior consent to the dispensing of prescription drugs by LB&J to its covered

injured employees. See e.g. Tyler v. Rockwood Insurance Company, 96-0326,

pp. 7-8 (La. App. 1 Cir. 2/14/97), 690 So.2d 834, 839, writ denied, 97-0673 (La.

4/25/97), 692 So.2d 1093 (wherein the appellate court upheld a lower court ruling,

which held that a payor’s consent to medical treatment of an injured employee

obligated the payor for the cost of treatment rendered until the date of the payor’s

notice that no further payments for the medical treatment would be made, as the

notice constituted a withdrawal of the earlier consent and/or agreement to pay).

Cf. LSA-C.C. art. 2024 (“A contract of unspecified duration may be terminated at

the will of either party by giving notice, reasonable in time and form, to the other

party.”).

Even though, prior to June 5, 2008, LUBA may have obligated itself to

reimburse the plaintiff/health care providers for prescription medications dispensed

to injured employee patients during in-office medical treatment by LB&J

physicians, LUBA’s June 5, 2008 letter notified LB&J and its physicians that it

would no longer pay for LB&J dispensed prescription medications; therefore, any

ongoing consent to, or authorization of, in-office dispensing of prescription

medications by LB&J physicians was terminated. No authority has been cited to

this court that would require a workers’ compensation payor to authorize any and

all medical treatment a physician could possibly provide at an office visit simply

because the office visit had itself been authorized.

A payor may choose to contest the reasonableness or necessity of any

element of a physician’s proposed treatment, subject to oversight by the OWC.

See LSA-R.S. 23:1034.2(F)(1) (“Should a dispute arise between a health care

provider and the employee, employer, or workers’ compensation insurer, either

party may submit the dispute to the office in the same manner and subject to the

same procedures as established for dispute resolution of claims for workers'

8
compensation benefits.”); LSA-R.S. 23:1142(D) (“If the payor has not consented

to the request to incur more than a total of seven hundred fifty dollars for any and

all nonemergency diagnostic testing or treatment . . . and it is determined by a

court having jurisdiction in an action brought either by the employee or the health

care provider that the withholding of such consent was arbitrary and capricious, or

without probable cause, the employer or the insurer shall be liable to the employee

or health care provider bringing the action for reasonable attorney fees related to

this dispute and to the employee for any medical expenses so incurred by him for

an aggravation of the employee’s condition resulting from the withholding of such

health care provider services.”); LSA-R.S. 23:1310.3 (“A claim for benefits, the

controversion of entitlement to benefits, or other relief under the Workers’

Compensation Act shall be initiated by the filing of the appropriate form with the

office of workers’ compensation administration . . . . Except as otherwise provided

by R.S. 23:1101(B), 1361, and 1378(E), the workers’ compensation judge shall be

vested with original, exclusive jurisdiction over all claims or disputes arising out of

this Chapter, including but not limited to . . . payment for medical treatment . . . .”).

See also Rebel Distributors Corp. v. LUBA Workers’ Comp., 13-0749, p. 12

(La. 10/15/13), 144 So.3d 825, 834 (“[A] health care provider has a right to pursue

an administrative proceeding with the OWC for physician-dispensed

pharmaceuticals obtained by injured employees.”).

In the face of LUBA’s June 5, 2008 denial of consent and/or authorization to

the plaintiff/health care providers, the plaintiffs’ remedy was to then seek OWC

oversight of the dispute, pursuant to LSA-R.S. 23:1034.2(F)(1), LSA-R.S.

23:1142(D), and LSA-R.S. 23:1310.3. However, the plaintiff/health care providers

failed to seek an OWC remedy prior to continuing to dispense prescription

medications on five to seven occasions after June 5, 2008. Consequently, the

provisions of LSA-R.S. 23:1142 became applicable to those five to seven

9
occasions on which prescriptions were dispensed without LUBA’s consent.

Therefore, we conclude that the OWC judge properly imposed the $750

reimbursement restriction set forth in LSA-R.S. 23:1142, and the appellate court

erred in its subsequent decision to modify the OWC judgment to award the full

amount of charges for the prescription medications dispensed by the

plaintiff/health care providers after June 5, 2008. 10 Accordingly, we reverse that

portion of the appellate court decision that modified the OWC awards to increase

the amounts awarded (from $750 to $1,470.02, for Mr. Morris’s medication costs,

and from $750 to $1,359.65, for Mr. Poole’s medication costs).

Penalties and Attorney Fees

The remaining assignment of error presents the issue of whether penalties

and attorney fees should have been awarded to the plaintiff/health care providers.

Although the OWC did not award penalties and attorney fees, the appellate court

reversed that decision and awarded penalties and attorney fees under LSA-R.S.

23:1201(F)(4) (“[F]ailure to provide payment in accordance with this Section . . .

shall result in the assessment of a penalty . . . together with reasonable attorney

fees for each disputed claim . . . . Penalties shall be assessed in the following

manner: . . . (4) In the event that the health care provider prevails on a claim for

payment of his fee, penalties as provided in this Section and reasonable attorney

fees based upon actual hours worked may be awarded and paid directly to the

10
We note that, in so ruling, the appellate court placed great emphasis on the fact that LUBA did
not notify the injured employees of the fact that it had informed LB&J and its physicians that no
further physician-dispensed prescription medications would be reimbursed. However, there are
no express notice requirements in LSA-R.S. 23:1142. Although there are notice requirements in
LSA-R.S. 23:1201.1 (which was enacted by 2013 La. Acts, No. 337), these requirements were
not in effect in 2008 when these events transpired. Further, LSA-R.S. 23:1203(E)’s notice
requirement (that “[a] payor shall not deny medical care, service, or treatment to a claimant
unless the payor can document a reasonable and diligent effort in communicating such
information”) was not triggered by the particular facts and circumstances of this case since, as far
as the injured employee patients were concerned, the prescription drug treatment was not denied;
rather, the plaintiff/health care providers were simply instructed to direct the injured employee
patients to use their previously-issued prescription cards to obtain their prescriptions from local
retail pharmacies instead of from LB&J.

10
health care provider . . . .”).

Because one purpose of the workers’ compensation law is to promptly

provide compensation and medical benefits to an employee who has suffered

injury within the course and scope of employment, a failure to timely provide

payment can result in the imposition of penalties and attorney fees except when the

claim is reasonably controverted. See Authement v. Shappert Engineering, 02-

1631, p. 8 (La. 2/25/03), 840 So.2d 1181, 1186-87. See also LSA-R.S.

23:1203(F)(2) (“This Subsection shall not apply if the claim is reasonably

controverted or if such nonpayment results from conditions over which the

employer or insurer had no control.”). The crucial inquiry in determining whether

to impose penalties and attorney fees is whether the payor had an articulable and

objective reason to deny payment at the time it took action. See Authement v.

Shappert Engineering, 02-1631 at p. 11, 840 So.2d at 1188

In the instant cases, the payor, LUBA, denied consent for the dispensing of

prescription medications by the plaintiff/health care providers because the cost of

the prescription medications that the plaintiffs dispensed was two to eight times

greater than if the same medications had been dispensed by a local retail pharmacy,

which begs the question of whether a LSA-R.S. 23:1142 denial can be based on an

unreasonable fee.

Pertinent to the issue is the following language of LSA-R.S. 23:1203(B):

“The obligation of the employer to furnish such care, services, treatment, drugs,

and supplies . . . is limited to the reimbursement determined to be the mean of the

usual and customary charges for such care, services, treatment, drugs, and

supplies, as determined under the reimbursement schedule annually published

pursuant to R.S. 23:1034.2 or the actual charge made for the service, whichever is

less . . . .” (Emphasis added.) Although not defined in the workers’ compensation

law, “mean” is used in Section 1203 in the sense of a mathematical average and, as

11
stated in Section 1203, such allowable reimbursement is limited by LSA-R.S.

23:1034.2, which provides for the establishment and promulgation of a

“reimbursement schedule” to set forth such average costs for medical expenses.

See Authement v. Shappert Engineering, 02-1631 at p. 10, 840 So.2d at 1188

(“[T]he obligation of an employer to pay medical expenses is limited to . . . an

amount determined under the reimbursement schedule published annually pursuant

to LSA-R. S. 23:1034.2.”).

With regard to the mean, or average, of the usual and customary charges for

drugs, Paragraph (C)(1) of LSA-R.S. 23:1034.2 states: “The reimbursement

schedule shall include charges limited to the mean of the usual and customary

charges for such care, services, treatment, drugs, and supplies.” (Emphasis

added.) Paragraph (D) of LSA-R.S. 23:1034.2 directs that “[f]ees in excess of the

reimbursement schedule shall not be recoverable against the employee, employer,

or workers’ compensation insurer.”11 Left open by LSA-R. S. 23:1034.2(D)’s

restriction is the possibility that medical fees, even though falling within the

amounts set forth in the reimbursement schedule, may be deemed unreasonable,

unnecessary, or not “usual and customary,” and therefore not subject to

compensation under certain circumstances.

Furthermore, the expression of legislative intent set forth in LSA-R.S.

23:1020.1 makes it clear that the reasonableness of medical costs is an important

consideration. See LSA-R.S. 23:1020.1(C) (“Legislative intent. The legislature

finds all of the following: . . . (2) To facilitate injured workers’ return to

11
The reimbursement schedule for pharmaceuticals is promulgated in the Louisiana
Administrative Code, Title 40, Part I, in Section 2907, which provides that payment for
pharmaceuticals will be the lesser of: (1) the provider’s usual charge; (2) the provider/insurer’s
contracted charge; or (3) the average wholesale price (“AWP”) plus a percentage mark-up (of
10% for brand-name pharmaceuticals and 40% for generic pharmaceuticals), plus a dispensing
fee (as set by the Louisiana Department of Health and Hospitals for Medicaid). Section 2907
further states that the AWP is that listed in the most recent monthly update of the Annual
Pharmacists’ Reference Red Book, published by Medical Economics Company, Inc., in Oradell,
New Jersey (“Red Book”).

12
employment at a reasonable cost to the employer.”) (emphasis added). See also

Church Mutual Insurance Company v. Dardar, 13-2351, p. 14 (La. 5/7/14), 145

So.3d 271, 281 (“According to the plain words of [LSA-R.S. 23:1203], an injured

employee is not entitled to payment for all future medical treatment occasioned by

an accident; rather, the employer’s liability is limited to that which is necessary.

Thus, in order to state a cause of action for and recover medical expenses

authorized by the statute, an injured worker must require medical expenses that are

reasonably necessary for the treatment of a medical condition caused by a work

injury.”) (emphasis added).

In the instant cases, LUBA contests, as unreasonable, the dispensing of

prepackaged prescription medications at a cost ranging from two to eight times

greater than if the same medications were individually dispensed by a local retail

pharmacy.

LUBA Care Supervisor, Clyde Paul Roy, Jr.’s testimony was submitted to

the OWC; he stated that retail pharmacies generally do not deal in prepackaged

drugs, which are supplied directly from the drug manufacturers mainly for use in

hospitals. Mr. Roy explained that prepackaged drugs are routinely dispensed in a

hospital setting in order to make it easier for nurses to administer medications to

hospital patients “instead of having a big bottle that they have to count medication

out of.” Mr. Roy also testified that the prepackaged drugs dispensed in a

physician’s office are generally in multiple pill, sealed packages (the package

remains sealed and the physician’s staff merely affixes a label and delivers it,

sealed, to the patient), which are assigned, for Red Book purposes, a different

National Drug Code (“NDC”) and AWP than the NDC and AWP assigned for the

same medications when packaged for dispensing by a retail pharmacy. Mr. Roy

stated that, because the AWP is two to eight times higher for prepackaged

medications than for medications dispensed by retail pharmacies, the

13
reimbursement schedule cost is correspondingly higher. 12 Mr. Roy further testified

that, in directing the plaintiff/health care providers to issue prescriptions to injured

employee patients that could be filled at local retail pharmacies, LUBA was

attempting to “get the exact same drug for half or an eighth of the price” of the

amount billed by the plaintiff/health care providers “without costing the claimant

anything.” 13

Although plaintiffs’ counsel argued before the OWC that LB&J physicians

dispensed the prescription medications in-house in order to “keep tabs on” the

narcotic medications dispensed and “to keep . . . folks [from] going and shopping

for . . . drugs at multiple pharmacies,” the testimony presented did not establish an

adequate basis for the assertion; 14 nor was there any testimony that the dispensing

of prescription medications by LB&J was in any way advantageous to the injured

employee patients.

After receiving the testimony and evidence, the OWC judge concluded that

“[e]ven if the medication was exactly the same, the lack of pharmacist oversight

12
Mr. Roy also pointed out that the AWP listed in the Red Book is the price set by the
manufacturer of the drug.
13
Mr. Roy also testified that, during 2008, LB&J staff dispensed prescription medications from
the private pharmacy stock of each individual LB&J doctor, and the dispensed medications were
billed under each doctor’s tax identification number. However, Mr. Roy stated that in 2009 a
retail pharmacy was opened at LB&J, and this pharmacy, Falcon Pharmacy, was a “[f]ull,
complete pharmacy with pharmacy techs” and a licensed, registered pharmacist on duty, which
he had personally visited. Mr. Roy further testified that Falcon Pharmacy joined the LUBA
pharmacy “network” shortly after it opened, and the LUBA network has thereafter reimbursed
Falcon Pharmacy for prescriptions, since the drugs are billed at the much lower network contract
price. Mr. Roy’s testimony was confirmed by the testimony of LB&J witnesses.
14
LB&J office manager Simone Clark testified that LB&J “had a problem with forged
prescriptions” and that “[p]atients would take a prescription and either change the quantity of the
prescription or change how it was dispensed . . . .” Ms. Clark also testified that pharmacies
would call to verify the number of pills prescribed when the number appeared to have been
changed on a prescription and, if so, the police were called. Ms. Clark indicated that they were
concerned about prescriptions that may have been forged, for which outside pharmacies did not
call to verify. However, Ms. Clark admitted that “[m]ost of the time” attempts to fill
unauthorized, modified LB&J-issued prescriptions were discovered. In contrast, Mr. Roy
testified that he had not seen a single instance of prescription forgery by a workers’
compensation claimant, and he pointed out that the Pharmacy Board implemented a program for
the electronic transmission of prescriptions from a doctor to a pharmacy in order to combat
forgery problems associated with the dispensing of narcotic drugs, obviating the need for
issuance of written prescriptions, which could be illegally modified.
14
deprived the patient of a level of service that a retail pharmacy provided.” The

OWC judge was particularly concerned that, although LB&J doctors generally

discussed the medications to be prescribed with a patient in terms of what to expect

from the medications, LB&J doctors did not go over with patients, or hand out to

patients, informational literature about the prescribed medications. Further, the

OWC judge pointed to the fact that there was no pharmacist on staff to go over

side effects or potential drug interactions with patients and that no LB&J doctor or

other employee performed that function. Thus, the OWC judge concluded that the

dispensing service received by LB&J patients “was less than the patients would

receive at a retail pharmacy,” in essence concluding that based on the evidence

presented there was no advantage to the injured employee in getting prescription

medications directly from LB&J and that receiving deficient prescription

dispensing services at LB&J may have been harmful to the injured employees.

Further indicating that reasonable cost for prescription medications was an

appropriate consideration for a payor and that LUBA had adequately notified

LB&J physicians that it would not continue to pay for LB&J-dispensed

prescription medications, the OWC judge concluded that LUBA had probable

cause to controvert the cost of the prescription medications for which the

plaintiff/health care providers sought reimbursement.

Factual findings of an OWC judge are subject to the manifest error standard

of review on the OWC’s findings of fact; therefore, in order for a reviewing court

to reverse an OWC judge’s factual findings, it must find that a reasonable factual

basis does not exist and the record establishes that the factual findings are clearly

wrong. See Dean v. Southmark Construction, 03-1051, p. 7 (La. 7/6/04), 879

So.2d 112, 117. See also Arabie v. CITGO Petroleum Corporation, 10-2605, p.

4 (La. 3/13/12), 89 So.3d 307, 312; Mart v. Hill, 505 So.2d 1120, 1127 (La.

1987).

15
 Our review of the record presented in these cases does not reveal the factual

findings of the OWC judge to be manifestly erroneous. There was a reasonable

basis in the record for the OWC to have found that there was no advantage to the

injured employees in having their prescription medications dispensed in-house by

LB&J, that the prepackaged drugs dispensed by LB&J cost significantly more than

if the drugs had been dispensed by a retail pharmacy, and that LB&J was not

providing an equivalent pharmaceutical dispensing service to the injured employee

as compared to that generally provided by a full-service retail pharmacy.

Furthermore, evidence was presented upon which the trier-of-fact could have

found that the dispensing of prepackaged medications in a doctor’s office setting,

rather than a hospital setting, was not “necessary” or “usual and customary,” as

required by LSA-R.S. 23:1034.2 and 23:1203. Nor do we find, under the specific

facts and circumstances present in the instant cases, legal error in the OWC

decision that reasonableness of the cost of the prescription medications was a

factor that the payor, LUBA, was entitled to consider in the application of LSA-

R.S. 23:1142. Therefore, the OWC did not err in concluding that LUBA

reasonably controverted that portion of the prescription medication costs, charged

by the plaintiff/health care providers, that exceeded the $750 limit set forth in

LSA-R.S. 23:1142.

Nevertheless, the parties do not dispute that, under LSA-R.S. 23:1142, $750

of the nonemergency treatment charges are enforceable, as Section 1142 provides

that a health care provider “may not incur more than a total of seven hundred fifty

dollars in nonemergency diagnostic testing or treatment without the mutual consent

of the payor and the employee” and “that portion of the fees for nonemergency

services of each health care provider in excess of seven hundred fifty dollars shall

not be an enforceable obligation against the employee or the employer or the

employer’s workers’ compensation insurer unless the employee and the payor have

16
agreed upon the diagnostic testing or treatment by the health care provider.”

(Emphasis added.) Thus, we examine whether the defendants reasonably

controverted, i.e. had an articulable and objective reason to deny, payment of $750

in costs for each of the injured employee patients here.

With respect to the cost of the nonemergency treatment at issue in this case,

the November 25, 2014 OWC written reasons for judgment noted only that

“LUBA paid the $750 when the Rebel [Distributors Corp. v. LUBA Workers’

Comp., 12-0909 (La. App. 3 Cir. 4/2/14), 137 So.3d 91] case was published.”

Further, the only testimony as to why LUBA waited until 2014 to pay the $750 in

nonemergency treatment costs, incurred for each of the instant injured employee

patients in 2008, was presented during the February 24, 2014 OWC hearing in a

colloquy between LUBA representative C. Paul Roy and LB&J’s counsel, as

follows:

[By Counsel for LB&J:] . . . At any time, did you try to pay either the
fee schedule or the contracted rate that you now have on these bills, in
particular?

[By Mr. Roy:] No, sir.
* * *

[By Counsel for LB&J:] And these -- these bills are still unpaid six
years later, correct?

[By Mr. Roy:] Yes, sir.
* * *

[By Counsel for LB&J:] . . . [O]nce we tried [a related] case last
January and we got the opinion from [the OWC judge] saying that you
were required to reimburse Drs. Blanda and Cobb for the medications
that were dispensed in the office, LUBA did not appeal that, and
instead paid those bills to Dr[s]. Blanda and Cobb, correct?

[By Mr. Roy:] Yes, sir.

[By Counsel for LB&J:] Okay. At that time, . . . why did LUBA not
pay the other identical prescriptions that were at -- at issue in the
sixteen other cases involving LUBA and Drs. Blanda and Cobb?

[By Mr. Roy:] We had referred to our counsel and said that we were
willing to pay all owed bills according to that decision, and the

17
response we got back was that the request had been made for us to pay
penalties and fees for each one of those cases. And in the case [tried
last January], there was no penalties and attorneys’ fees assigned, so
we were willing to pay based on that decision, but we were not willing
to pay penalties and attorneys’ fees for all of those cases.

[By Counsel for LB&J:] Well, you’re talking about whether or not
the plaintiffs would have settled the entire case by you paying those
bills, but what would have kept you from just making a payment on
those bills and leaving the issue out there for penalties and attorneys’
fees?

[By Mr. Roy:] . . . [W]e get 1008 suits all the time that are
questionable, at best. And we’re more than willing, [the] majority of
the time, to cover the amounts that aren’t paid. But that doesn’t stop
attorneys from continuing to press the issue and bring it to court and
ask for penalties and attorneys’ fees. So, the -- the offer was made to
tender the amount that was owed on all bills, and the answer we got
back was, “We’re not willing to accept that offer unless you pay
penalties and attorneys’ fees for all of them.”

[By Counsel for LB&J:] Let me just get it clear for the record. You
didn’t make an offer to tender it. You could have just gone ahead and
tendered payment. Y’all just offered to pay that in [the] way of
settlement of all the claims, correct? In other words, you wanted a
release from all the claims for penalties and attorneys’ fees, and all
that, right?

[By Mr. Roy:] I’m guessing so. I mean, we --

[By Counsel for LB&J:] Okay.

[By Mr. Roy:] -- we -- like I said we went through our counsel for all
of that. And I know it’s -- at one point, there was even a -- a dispute
[about] . . . the amount that was owed, because the amount that I had
on record that we owed was -- was different than the amount that our
attorney was being given. And -- and not that we were saying we
didn’t owe all of that that was being stated, we just didn’t have a -- a
bill on record to indicate the same amounts. And -- and I had asked
that we actually get a copy of all those bills so that we knew exactly
what was owed, but I never received all of that.

[By Counsel for LB&J:] Well, I’ve been involved in a lot of these
PPO cases, and sometimes we’ll actually get checks that are tendered
for amounts in dispute; although, there’s no settlement yet in the case.
But there’s just a payment made . . . and we typically will forward
those on to the healthcare providers. We don’t turn down any tenders
of payment. You didn’t make any kind of a tender like that, did you?

[By Mr. Roy:] No, sir.

The testimony presented on this issue fails to show that LUBA had an

18
objective reason for failing to pay the $750 per patient owed. Even though the

plaintiffs were demanding payment of the entire billed amount as well as penalties

and attorney fees, LUBA could have tendered only $750 per patient, an amount it

admitted was owed under LSA-R.S. 23:1142. Consequently, penalties and

attorney fees were properly imposed by the appellate court in these cases, and we

affirm that portion of the appellate court decision.

DECREE

As set forth hereinabove, we reverse, in part, the appellate court’s

modification of the amount awarded by the OWC and affirm, in part, the decision

of the appellate court to award penalties and attorney fees.

REVERSED IN PART; AFFIRMED IN PART.

19
06/29/2016

SUPREME COURT OF LOUISIANA

NO. 2015-C-2137

LAFAYETTE BONE & JOINT CLINIC (CHARLES MORRIS),
ET AL. VERSUS LOUISIANA UNITED BUSINESS SIF, ET AL.

CONSOLIDATED WITH

NO. 2015-C-2138

LAFAYETTE BONE & JOINT CLINIC (CHARLES POOLE, JR.),
ET AL. VERSUS GUY HOPKINS CONSTRUCTION CO., INC.,
ET AL.

KNOLL, Justice, concurring.

While I agree with the majority’s holdings regarding the choice-of-pharmacy

issue, mutual consent, and the imposition of penalties and attorney fees, I find its

discussion and interpretation of La. R.S. 23:1203 and 1034.2 unnecessary. Rather I

would review the penalties and attorney fees issue strictly from a La. R.S. 23:1142

context and find the record evidence reveals LUBA lacked an objective reason for

failing to pay the statutorily mandated $750 owed per patient. For this reason, I

respectfully concur.
06/29/2016
SUPREME COURT OF LOUISIANA

NO. 2015-C-2137

LAFAYETTE BONE & JOINT CLINIC (CHARLES MORRIS), ET AL.
VERSUS
LOUISIANA UNITED BUSINESS SIF, ET AL.

CONSOLIDATED WITH

No. 2015-C-2138

LAFAYETTE BONE & JOINT CLINIC (CHARLES POOLE, JR.), ET AL.
VERSUS
GUY HOPKINS CONSTRUCTION CO., INC., ET AL.

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, THIRD CIRCUIT,
OFFICE OF WORKERS’ COMPENSATION, DISTRICT 4

WEIMER, J., dissenting.

Respectfully, in my estimation, the majority neatly but erroneously sidesteps the

issue which has split the circuits: whether the employer/payor has the right to

determine where the employee can have a prescription filled and whether the

dispensing of prescription medication constitutes “nonemergency diagnostic testing or

treatment” so as to trigger the provisions of La. R.S. 23:1142.

The dispensing of medication (as distinguished from prescribing or

administering medication) is neither nonemergency diagnostic testing nor

nonemergency treatment. Louisiana R.S. 23:1142(B), by its language, governs

“nonemergency diagnostic testing” and “nonemergency ... treatment”; thus, La. R.S.

23:1142(B), by its language, does not apply to the dispensing of medication. See

Rebel Distributors Corp., Inc. v. LUBA Workers’ Comp., 12-909, p. 1 (La.App. 3

Cir. 4/2/14), 137 So.3d 91, 101 (Thibodeaux, C.J., dissenting in part). Accordingly,

under the law as written, the employee’s recovery for costs of dispensed medication

is not capped at $750.
 The employer is required by La. R.S. 23:1203 to supply medication. Unlike La.

R.S. 23:1121(B), governing the selection of a “treating physician,” the employee is not

afforded an absolute right to select a pharmacy. With the employer’s obligation to

supply medication comes the authority to advise what pharmacy can be used by the

employee, provided the employer’s/payor’s direction in this respect is not arbitrary or

capricious and provided, of course, that the medication is furnished in a timely

fashion.1 See Downs v. Chateau Living Ctr., 14-672, p. 9 (La.App. 5 Cir. 1/28/15),

167 So. 3d 875, 881; Bordelon v. Lafayette Consolidated Government, 14-304, pp.

2-3 (La.App. 3 Cir. 10/1/14), 149 So.3d 421, 422-23, writ denied, 14-2296 (La. 2/6/15),

158 So.3d 816; Sigler v. Rand, 04-1138, pp. 14-15 (La.App. 3 Cir. 12/29/04), 896 So.

2d 189, 198, writ denied, 05-0278 (La. 4/1/05), 897 So. 2d 611.

Acting within the statutory scheme, the payor advised Lafayette Bone & Joint

Clinic that it was not an acceptable provider of medication and instructed it to cease

from dispensing medications to the employees in question.2 This was a rational choice

made by the payor given the cost differences involved.3 Accordingly, under the facts

of this case, the payor is not legally responsible for the cost of the medication

dispensed once the payor notified Lafayette Bone & Joint Clinic to stop dispensing

1
In this case, the payor gave the employee a lengthy list of pharmacies from which prescription drugs
could be obtained at “no out-of-pocket” cost to the employee. See Lafayette Bone & Joint Clinic
(Charles Morris) v. Louisiana United Business SIF, 15-2137, 15-2138 (La. __/__/16), slip op. at
2 n.2. There is no evidence in this case that the use of these pharmacies would inconvenience the
employees in any way or that these pharmacies were unavailable to the employees.
2
Lafayette Bone & Joint Clinic ignored the notifications and continued to dispense medication to
these employees rather than utilizing the procedures set forth in the workers’ compensation law for
challenging the insurer’s refusal to include Lafayette Bone & Joint Clinic in its list of approved
pharmaceutical providers. See Lafayette Bone & Joint Clinic (Charles Morris), 15-2137, 15-2138,
slip op. at 8-9.
3
As noted by the majority, the payor “was attempting to ‘get the exact same drug for half or an eighth
of the price’ of the amount billed by the plaintiff/health care providers ‘without costing the claimant
anything.’” Lafayette Bone & Joint Clinic (Charles Morris), 15-2137, 15-2138, slip op. at 14.

2
medication to these employees. For this same reason, the Office of Workers’

Compensation judge did not err in failing to assess penalties and attorney fees.

For these reasons, I respectfully dissent.

3
06/29/2016

SUPREME COURT OF LOUISIANA

No. 2015-C-2137

LAFAYETTE BONE & JOINT CLINIC (CHARLES MORRIS), ET AL.
VERSUS LOUISIANA UNITED BUSINESS SIF, ET AL.

CONSOLIDATED WITH

No. 2015-C-2138

LAFAYETTE BONE & JOINT CLINIC (CHARLES POOLE, JR.), ET AL.
VERSUS GUY HOPKINS CONSTRUCTION CO., INC., ET AL.

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, THIRD
CIRCUIT, OFFICE OF WORKERS’ COMPENSATION, DISTRICT 4

Guidry, J., concurs and assigns reasons.

I concur in the result but write separately to express my view that the payor

acted within its authority to withdraw authorization from the physicians to dispense

medications to LUBA claimants. The employer’s duty to furnish prescription

medications is addressed in La. R.S. 23:1203(A): “the employer shall furnish all

necessary drugs, . . . and shall utilize such state, federal, public, or private facilities

as will provide the injured employee with such necessary services.” However, the

employer does not violate its obligation to the employee when it chooses to have

his prescriptions filled by a different pharmaceutical company, so long as that

choice is reasonable and there are no deficiencies in the filling of the employee’s

prescriptions in a timely manner. See Downs v. Chateau Living Ctr., 14-672, p. 9

(La.App. 5 Cir. 1/28/15), 167 So. 3d 875, 881; Bordelon v. Lafayette Consolidated

Government, 14-304, pp. 2-3 (La.App. 3 Cir. 10/1/14), 149 So.3d 421, 422-23, writ

denied, 14-2296 (La. 2/6/15), 158 So.3d 816; Sigler v. Rand, 04-1138, pp. 14-15

(La.App. 3 Cir. 12/29/04), 896 So. 2d 189, 198, writ denied, 05-0278 (La. 4/1/05),

897 So. 2d 611.

1
 Here, the payor invited comment before ultimately placing the

plaintiff/health care provider on notice that LUBA would no longer reimburse for

physician-dispensed medication because it is significantly more expensive under

the workers’ compensation fee schedule than the same medication obtained from a

retail pharmacy. That decision by the payor was not shown to be unreasonable or

to result in any deficiencies in filling the employee’s prescriptions, as the record

established the employee could present his prescription to any retail pharmacy.

Moreover, the OWC judge found there was a substantial benefit to employees in

having their prescriptions managed by a licensed pharmacist. Accordingly, under

the facts of this case, I do not find the payor was legally responsible for the cost of

medication dispensed after the plaintiff/health care provider was placed on notice,

subject to the reimbursement restriction in La. Rev. Stat. 23:1142.

2